Economy On Growth Trajectory

In the inaugural speech of his second term, the Prime Minister shared his vision of making India a $5 trillion economy in the next five years. Many actions are needed to move towards achieving that target. The budget laid down the roadmap as a starting point. And there has been subsequent traction to take the intent forward. 

Recently, the Union government announced a few measures towards strengthening the basics to boost entrepreneurship. One such measure was announced by the finance minister in the Rajya Sabha that all companies (99.3% were presently covered in the budget by lowering corporate tax from 30% to 25% for all companies by enhancing the turnover cutoff from Rs 250 crore to Rs 400 crore) irrespective of turnover will be extended the corporate tax slab of 25%. It’s a positive signal reiterating the government’s resolve of encouraging entrepreneurship and generating employment. 

Another progressive step towards building employability was announced recently by the Ministry of Skill development and Entrepreneurship wherein an annual expenditure of Rs 5,000 crore has been earmarked towards the hitherto ignored 93% of the workforce in the unorganized, informal sector. Till now, the 7% workforce engaged in the formal sector has been at the centre of the skill development interventions to the exclusion of a vast majority engaged in the informal and unorganized sector. This recent announcement will encompass and benefit a large section of the workforce, thus, hopefully positively impacting their lives and strengthening employability. 

An interesting fact came to light in a recent report of Computer Age Management Systems (CAMS) which outlined that almost half (47% to be precise) of mutual fund investors in India in the year 2018-19 were millennials. If we analyze it closely, the reasons are clearly low rates of interest on savings accounts and fixed deposits coupled with relatively better returns on mutual funds which also offer tax savings selectively which has prompted the millennials to prudently opt for a decent, less risky investment.

India continues its stable growth path. 

The compensation hike in corporates is expected to beat inflation like past years this year as well with an estimated double-digit hike. The median increase expected is of 10.95% this year according to the report, ‘Jobs & Salaries Primer 2019’, by TeamLease Services. Eight out of seventeen sectors surveyed and six out of nine cities covered have showed positive sentiments in salary growth. BFSI, BPO and IT-enabled services, e-commerce and tech start-ups, educational services, FMCG and healthcare would be ‘top paymasters’ with salary growth of over 13%. These positive developments would increase consumption and continue the multiplier effect fueling economic growth and employment generation. 

In line with its endeavor to bring about labor reforms, the government introduced the labor codes on ‘wages’ and on ‘occupational safety, health and working conditions’ in the Lok Sabha earlier this month (2 out of the proposed 4 labor codes). In the 16^th Lok Sabha, a bill proposing these was introduced but it could not see the light of the day as the term of the Lok Sabha got over before the bill was passed. The Code on Wages Bill proposes to encompass all workers (from the 40% covered now to 100%). Compulsory digital payment will bring transparency and minimize corruption. Similarly, the Code on Occupational Safety, Health and Working Conditions will help improve the ease of doing business. 

The government has also taken a great step towards promoting eco-friendly mobility by reducing the tax rate on electric vehicles (EVs), EV chargers and spare batteries to 5%. In addition, if local authorities hire electric buses, they can avail GST exemption. This step manifests India’s commitment to climate change and sustainability. 

Hope the momentum of right actions taken towards fulfilling the $5 trillion vision continues with alacrity and the execution is equally prompt and flawless. A large population of capable, ambitious youth is waiting eagerly to lap up opportunities generated by the government and private sector to make them employable and create jobs for them so that they contribute their mite to making India a formidable economy.